Precious metals are generally considered to be safe investments. This is because their value does not fluctuate as much as other investments in volatile markets. Of all the precious metals, gold is the most popular as an investment.
Most Indian families are unfamiliar with any other forms of investments apart from gold. The precious metal is the second most preferred investment vehicle after bank deposits in India. The country is also the world’s largest consumer of gold as jewelry.
Gold has been prized since as long as time can remember. Ancient cultures used the precious metal to make statues and icons and also for jewelry. A lot of significant buildings and religious temples and statues have been covered with thinly beaten sheets of gold.
Due to its rarity, gold has long been considered a symbol of the wealth and power of its possessor. It has most commonly been used as currency over the ages and even to this day. It is also used as a relative standard for currency equivalents specific to economic regions or countries.
Like most other commodities in the stock market, gold prices are driven by the supply and demand from consumers in the market. However, hoarding and disposal also play a big role in the price of gold. It is more affected by changes in sentiment than annual production. For example, In India the price of gold goes up during the festive season as well as the wedding season.
The most traditional means of investing in gold other than buying jewelry is in bullion gold bars. These can be bought and sold from major banks in most countries. However there is a certain risk of fraud involved in such large bars as they may have tungsten cavities. Gold coins are another means to invest in gold. These are priced according to their fine weight with an added premium based on supply and demand. Gold coins can be purchased from a variety of local dealers.
Gold can also be traded like shares of stock. This may be the gold ETF. Gold ETFs are a relatively easy way to invest in gold without physically to save it. These funds, however, come with the normal risks of other funds.
A small commission is typically charged for trading in such funds along with an annual storage fee. The annual expenses of the fund such as storage, insurance and management fees are charged by selling a small amount of gold represented by each certificate. This means that the amount of gold in each certificate will gradually decline over time.
There are a few companies in India that offer such Gold Exchange-Traded funds as investment options.
If you wanted to know about mutual funds nav India and did not know how to, check this out. We have the sip calculator information you need as well.
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